I'm glad to know I'm not the only one with unanswered questions.

I did uncover a question asked back May in a Win 7 Technet forum
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I am helping our customers to deploy Windows 7 and to mitigate all application compatibility issues. Since all the users will logon as standard user, so we rely on UAC virtualization (file and registry virtualization) to resolve most of the incompatibilities issues and it works as expected.

Now, customers wish to relocate the user profiles from C:\ to D:\ (I mean relocating the entire user profiles C:\Users, not the user profile folders) and that cause UAC virtualization to fail and hence cause many new application compatibility issues.

We tried many ways to relcate the user profiles, such as using the ProfilesDirectory in unattended.txt or other methods we found from internet. All caused the UAC virtualization to fail.
There was only 1 reply and it was from Juke Chou, Microsoft Contingent Staff, Moderator.

There is not any document to indicate the UAC Virtualization of Windows 7 can support the relocated user profile. So I assume this is by design.
Seems to me to suggest moving the entire Users folder might cause some hassles for enthusiasts, but is a serious problem when a user is restricted to a be "standard user."
Of course, my I was quite tired by the time I started reading more about UAC Virtualization. But that's what I get out of it.